Beijing, June 29 (Reuters): First, a hit television epic challenging official history was yanked off the air. Then came a blatant about-face by a health official, an opaque Shanghai banking probe and abrupt curbs on the press.

The developments, Chinese sources say, signal inner strife between increasingly confident Communist Party boss Hu Jintao and his influential predecessor Jiang Zemin, seven months after China’s smoothest power handover since the 1949 revolution. They said Jiang, who remains chief of the nation’s vast military machine, had made calculated stabs to reassert his authority in recent weeks. Hu supporters have cried foul.

“It’s not an overt struggle. It’s a covert struggle,” said one party official of an intrigue unfolding at a critical juncture.

Hu is preparing to mark the party’s July 1 birthday with a speech expected to touch on “inner party democracy”.

In the run-up to July 1, journalists and intellectuals have fuelled hopes Hu will push for faster systematic change and increased openness after the embarrassing cover-up of the SARS epidemic and a rash of legal scandals.

But analysts see the cautious Hu taking only small steps toward political reform, particularly with Jiang still in the wings.

“Under these circumstances, Hu has to be careful,” said one party newspaper editor. “He will not bring up much that is new.”

Hu, 60, was once seen as prone to pressure by Jiang and his allies known as the “Shanghai Gang”. But by declaring an all-out “people’s war” on SARS, he has established himself quicker than expected since becoming President in March.

By contrast, Jiang drew flak after the army’s initial refusal to disclose SARS cases, the dismissal of health minister Zhang Wenkang — once Jiang’s personal physician — and the aloofness of his camp during the SARS campaign. The Shanghai probe into improper loans to property barons could also taint Jiang allies. Frictions have surfaced.

In early June, talk spread that party elders had written a letter urging Jiang to retire.

The petition, signed by Hu’s patron Song Ping and Jiang’s old conservative rival Qiao Shi, questioned whether Jiang’s proteges would be implicated in the Shanghai case, one source said.

“They basically wrote, ‘Your handling of SARS and other matters is affecting the current leaders’ leadership’.”

Jiang, 76, has not taken criticism lying down.

“The West is capitalising on the Iraq war and SARS to pressure China. That’s what Jiang is saying,” the editor said.

In late May, when Hu made his first trip abroad as President to Russia and France, Jiang swooped into Beijing from his home in Shanghai, three sources said.

The first person he met was Zhang, they said. The two nibbled dumplings, another editor added, in a meeting clearly aimed at exculpating the disgraced health boss.

Then on May 30, vice-health minister Gao Qiang defended his former boss at a televised news conference and denied any cover-up. But state media criticised Gao and, one source said, superiors rebuked him.

Two weeks later, he reversed himself, blaming Zhang for the slow response to SARS and the weakness of the health system.